Logistics Policy - Case Study Example

Logistics Policy Introduction International logistics entails transactions involving individuals or firms in more than one nation detailing complex web of carriers, traders, and forwarders facilitating international transactions, trades, and movement of goods and services. International logistics encompasses activities such as procurement, conversion management, and physical distribution management. Logistics forms a critical component of competitiveness allowing the integration of a wide range of transport services within the supply and distribution chains. Logistics embraces the strategic design of structures and policies, as well as decision making dwelling on material and information flows, fashioned at supporting and enhancing competitive advantage (Waters, 2003). Strategic decisions hinge on aspects such as warehouses, distribution centres, as well as transportation modes to be employed. Discussion The logistics industry has undergone massive changes in recent decades, especially in areas of integration of information, transportation, inventory, warehousing, packaging, material handling, and security; it is no longer home-based and functions in a global market. The North America Free Trade Agreement involves U.S., Canada, and Mexico, and entails harmonization of the members’ logistics policies and procedures, as well as making logistics systems interoperable. The size of U.S. economy and its geographical location have motivated the United States in taking a factual leadership position in matters regarding facilitation of intermodal logistics and transport within the region, inclusive of cross-border facilitation. The move towards a unified and interconnected modal system has been critical in the growth of logistics systems. Benefits arising from an integrated intermodal system include lower transport costs, lower environmental impact, enhanced national productivity, and efficiency. Intermodal transport and logistics is mainly driven by the industry via its search for the low cost solutions. Other factors playing a part include market deregulation and competition between shippers and carriers, which lead to a reduction in transport-related transaction costs for business (Murphy & Wood, 2010). The global sourcing of parts, goods and services, and raw materials has heightened the importance of logistic networks. Besides, trends towards internationalization and innovation have enhanced the need for organizations to be more alert and receptive to the contextual changes. The evolving trends in the creation of an international logistics hub demands the establishment of trends such as innovation, global integration, international investment and trade, and strategic business networks, as well as new physical and social technologies. The contemporary market is connected, global, and hypercompetitive, leading to adoption of the supply chain view aided by the removal of trade barriers and technological advancement within transport and communication sector. The evolution towards internationalization has fuelled organizations’ quest for effective and strategic competitive advantage. The economic-political decisions within the present global scenario hinge on certain reasons, which include the quest for fresh and attractive markets and the search for high quality and low cost products, raw materials and energy sources. The trends have been the foundation of globalization of commerce and production resulting from dynamic flow of material and information (Waters, 2003). Challenges Confronting Creation of an International Logistics Hub The management of international logistics is complex compared to domestic logistics because situations are less steady, and the geographical orientation is wide, and screening of logistics is more complex besides business practices and standards differentials across nations. The top priority for the development of an international logistics hub entails freight mobility, global connectivity, security and border infrastructure (Murphy & Wood, 2010). Besides the developments in the intermodal transport and logistics, there are still a number of impediments to intermodalism. These include inadequate infrastructure, operation inefficiencies at terminals, congestion on access roads serving ports and terminals, regulations that result to delays and costs in the course of building new facilities, financial bottlenecks in both private and public sectors, and institutional constrains such as customs, domestic and foreign partner relationships, and government data requirements. The three critical enablers to meeting challenges such as logistics and transportation include political, economic, and regulatory stability (predictability), a first-rate physical IT, and financial infrastructure, and a critical mass of logistics professionals with a strong customer orientation. Technological improvements have had a massive bearing on international logistics, especially in the arena of information management. The advancement in information technology has availed access to facilitating tools in global supply chains (Murphy & Wood, 2010). As a result, global logistics systems have become predictable and reliable owing to enhanced information flow. Congestion and Transportation Policies Effective congestion and transport policy features aspects such as sustainability through multimodal transport system, efficiency as demonstrated by aspects such as global competitiveness and seamless intermodal door-to-door operations, and innovation achievable through systematic application of advanced technologies. Some of the policy measures that may aid logistics and transportation include technology applications, infrastructure oriented projects, and co-funding approach and partnerships to enhance investment within the sector. Intermodal logistics must pursue dual systems strategy that epitomizes the application of multimodal transport system (Waters, 2003). This calls for development of intermodal air traffic, intermodal rail traffic, and intermodal truck traffic. Policies aimed at decongesting transport modes should incorporate diverting freight traffic from road to rail, and where applicable, to coastal shipping and waterways. Intermodal transport should be driven by the market guided by both domestic and international freight flows. The role of the government should entail creating a level playing field for the market, as well as availing a coherent and interoperable transport and logistics networks of routes, ports, corridors, terminals, and airports. In doing so, the government should promote optimized application of the modes in order to meet the environmental requirements. The basic policy directions should revolve around charging and pricing, as well as revitalizing alternative modes. Some of the examples of intermodal policy measures include one-stop pre-clearance, pre-screening at exporting, around the clock reservation at the container terminal, interoperability of the rail system with standardized electronic manifest, intermodal terminal with transshipment technology, and a network for container transportation controlled by real-time navigating and tracking. The policy vision should be constructing a structured approach to intermodal freight transport within the framework of a lone transport market with advanced harmonization of regulations and competition rules. The intermodal transport and logistics policy to fight congestion and environmental problems should be directed at enhancing the overall traffic efficiency (Murphy & Wood, 2010). Ultimately, the goal should be optimization of interdependence and complementarities of transport modes. Huntsville, Madison County, and the State of Alabama should come up with measures directed at easing congestion and transportation issues as they pose a threat to economic growth. Safety and security are principal components that must be addressed when formulating transportation policies. Safety and Security The September 11 terrorist attacks transformed the face of international logistics, setting fresh priorities on security controls and precautions, which affected the face of logistics procedures and operations. Information Technology and Intelligence Transport System technologies such as electronic data interchange technologies, automatic vehicle and container identification systems, location and navigation systems, mobile communication technologies, database management, and value-added data manipulation systems hold key to the delivery of efficient and reliable control means, besides the need for international cooperation and standardization. Safety and security are critical to building of an international logistics system. This is certainly critical due to susceptibility of international logistics to terrorist attacks. Fresh security requirements add to the cost of doing business and elevate risk elements. There is a need to develop intelligence transport system architecture and standards, especially for freight identification technologies in order to guarantee interoperability and security controls (Waters, 2003). Safety and security measures should revolve around deterring any sabotage of logistics systems, setting up an evacuation plan, and placing a chain of command in case of alterations in security conditions. Supply Chain and Logistics Process Supply chain denotes a network of organizations engaged via upstream and downstream linkages, especially in diversified processes and activities that result to value in the form of products and services to consumers. Interwoven supply chains should be managed in an integrated and articulated way across all actors, networks, and stakeholders right from suppliers to consumers. Intermodal logistic systems should evolve effective and sustainable structures and policies able to serve a connected, dynamic, innovation guided, and competitive environment (Meade & Sarkis, 1998). Some of the intermodal policies in the United States include national corridor development, intermodal cargo hubs, National Highway System intermodal freight connectors, and coordinated border infrastructure program. The intermodal freight applications of intelligence transport systems are directed at several areas, which include supply chain management such as door-to-door shipment, node management such as port, rail terminal, and airport management. They also entail link management such as tracking and asset management of trucks chassis, rail equipment, and vessels. This is facilitated by the application of Intelligence Transport Systems (ITS) intermodal freight program and intermodal border clearance (Meade & Sarkis, 1998). The adopting of an integrated and advanced logistics and supply chain management is essential to the structuring of transportation and congestion policies. The improvement of intermodal freight operations via enhanced application of information technology and intelligence transport systems is guided by the need to enhance dependability, receptiveness, and safety and security of the intermodal freight system. One way of enhancing the logistic process entails complementing main port terminals with satellite terminals and other logistical zones performing functions such as transloading, consolidation, and deconsolidation. Other measures entail setting long distance inland corridors with inland ports in which logistic zones are co-located with rail terminals. Some of the integrated logistics support activities include reliability engineering, supply support, manpower and personnel, training and training support, packaging, handling, storage, and transportation. Additional Training in both Public and Private Sectors The competitiveness of any region depends on the ability of the workforce to compete successfully within the global marketplace. Corporate culture, learning, competence, innovation, and creativity are at the heart of competitiveness and log-term organization success. As a result, Huntsville, Madison County, and the State of Alabama must adapt to and effectively utilize new technology while at the same time ensuring that present skills and knowledge are applied in the construction of an international logistics hub (Murphy & Wood, 2010). This calls for continual training and adaptation to change, which can be facilitated by a substantial and ongoing investment in human capital. The achievement of an efficient logistics system demands an extensive co-operation and collaboration among private corporations, governments and international organizations. Environment Adaptation with an Emphasis on Value Added Skill Some of the factors that drive global logistics include value addition, efficiency, and control. Value addition enables capturing of economic opportunities along the supply chain by altering locational and procedural characteristics of freight distribution to enhance income such as through offshoring. Adaptation to the environment and emphasis on value-added skills is essential to enhancement of organization’s ability to learn and adapt to the changing environment. The production and delivery of value-added goods and services demands a highly skilled workforce so as to match the contemporary economic environment. The strategy should encompass adoption of knowledge management practices that foster creation, sharing and integration of knowledge (Murphy & Wood, 2010). The knowledge based practices should hinge on their roles in solving and exploring opportunities via integration of three critical value-added processes; identification, preservation, and distribution. The adoption of innovative business models encompassing knowledge management processes can aid an organization in the face of fast and complex change such as E-logistics. As the stature of Huntsville as an international logistic hub grows, the need for additional training in both public and private workforce expands. In order to sustain the growth of small, medium, and large enterprises and upgrade their global competitiveness, it is critical to enhance supply of value added skill. Other measures that can be employed to enhance the competitiveness include reducing seaport dues in order to remain competitive, minimizing airport landing/ parking charges and removal of land premiums and quit rentals. There can also be measures like reducing land costs near the sea and airport areas, as well as an extension of land tenure without additional premiums, allowing pre-clearance of cargo, and reviewing of regulations. Conclusion Organizations can learn from past experiences by transforming the experiences into vital knowledge that is critical to the enhancement of the future competitiveness. In order to enhance competitiveness, there is a need to promote opportunities afforded by logistics and sustainable development. This calls for development of an integrated policy framework geared towards achieving broad socio-economic objectives. The range of policy issues should cover matters regarding efficiency and sustainability of the global logistics systems. This incorporates strategic application of information technologies in development of transport efficiency and sustainability. References Meade, L., & Sarkis, J. (1998). Strategic analysis of logistics and supply chain management systems using the analytical network. Logistics and Transport Review 34 (3): 201-215. Murphy, P., & Wood, D. (2010). Contemporary logistics. New Jersey, NJ: Prentice Hall. Waters, D. (2003). Global logistics and distribution planning: Strategies for management. London, UK: Kogan Page. Read More